Tennessee's school vouchers: 6 things we learned from the first draft of program rules

Correction: A previous version of this story miscalculated an example for household income for those eligible for vouchers in Tennessee. The story's example has been updated based on federal income eligibility for free lunch rather than free and reduced lunch.

The Tennessee Department of Education recently released a first draft of rules that would govern the state’s school voucher program. The rules describe educational savings accounts, which will be used to fund the voucher program. A rulemaking hearing is scheduled for 1 p.m. Oct. 1 at the Tennessee Board of Regents in Nashville.

The bill was one of the most controversial before the Tennessee General Assembly this year and both the Senate and House needed to compromise before the legislation was sent to Gov. Bill Lee. Even then, it narrowly passed the House for the first time ever. It also passed the Senate by a close vote.

The voucher program, slated to take effect for the upcoming 2020-2021 school year, will be limited to students zoned for Metro Nashville Public Schools and Shelby County Schools. Amity Schuyler, deputy commissioner of Tennessee’s education department, will oversee development of the voucher program, Chalkbeat reported in July.

Students eligible for the voucher system must be zoned to attend a school in Shelby County Schools, Metro Nashville Public Schools or in the Achievement School District. The students must also come from a household with an annual income that does not exceed twice the federal income eligibility guidelines for free lunch. File photo(Photo: Brandon Dahlberg / For CommercialAppeal.com)

When the bill went through the House of Representatives in April, it was passed after a 40-minute deadlock ended when Rep. Jason Zachary, R-Knoxville, switched his vote. Zachary did so after behind-the-scenes discussions with House Speaker Glen Casada, R-Franklin, who assured Zachary that Knox County would be removed from the legislation at some point in the future.

Below are some highlights from the first draft of ESA rules. The full document is available at the bottom of this story.

1. Student eligibility largely determined by income and school zone

Student eligibility for an educational savings account is based on three requirements.

Zoning: Students must be zoned to attend a school in Shelby County Schools or Metro Nashville Public Schools, as well as a school in the Achievement School District as of May 24, 2019. Of the 29 schools in ASD, 27 are in Memphis and 2 are in Nashville.

Household income: The students must also come from a household with an annual income that does not exceed twice the federal income eligibility guidelines for free lunch. In a household of two, for example, that’s an annual income of $21,983, meaning a household of two with an annual income of less than $43,966 would be eligible for the voucher program.

Previous enrollment: Students must have been enrolled in and attending a public school in Tennessee for one full school year or be eligible for the first time to enroll in a Tennessee school or have received an ESA in the previous school year to qualify for the voucher program. Since 2020-2021 would be the first year for the ESA program in the state, all students, as either former or new students in Tennessee, would be eligible for the voucher, so long as they meet the zoning and income requirements.

In this draft of the rules, the account holder of the education savings account is defined as the parent of a student or a student who is 18. It is unclear from an initial review of these rules how an account would transfer between a parent to a student when the student turns 18.

2. Most private schools are eligible

This draft of the rules defines an eligible school as any private school that the state defines as Category I (approved by the Department of Education), II (approved by a state-approved accrediting agency) or III (accredited regionally).

The state lists these schools here.About 130 of these schools are located in Shelby and Davidson counties, though the zoning requirement that applies to students does not also apply to schools in this draft of the rules.

Schools interested in enrolling students receiving ESAs must submit an application, which will include, among other items, the maximum number of students in the voucher program that the school can accommodate.

3. Students in the voucher program must take state tests

Participating schools, as defined by these rules, will be required to administer tests within the Tennessee Comprehensive Assessment Program to students enrolled in the voucher program, including TNReady tests as well as alternative assessments.

Only students in the voucher program in grades 3-11 will take the tests, and only in math and English language arts.

4. Available ESA funds calculated by state’s per-pupil funding

Prior to the disbursement of funds, account holders must provide proof of enrollment in a private school. Funds are calculated via the state’s Basic Education Program, a funding formula that calculates per-pupil state and local funds. Participating students will be awarded the equivalent to the amount representing the per-pupil state and local funds for the student’s assigned school district or that amount for the state, whichever is less.

The first draft of these rules requires that account holders file expense reports for ESA funds used. The rules also stipulate that account holders obtain pre-approval for expenses. Timeline parameters on this approval process were not apparent upon initial review.

5. ESAs fund tuition, tutoring, transit

According to this draft of the rules, account holders could file for approval of the following expenses: tuition, textbooks, school uniforms, certain tutoring services, transportation fees, technology and computer hardware.

6. Funding can be used for in-state postsecondary education

The rules define postsecondary institutions as those operated by the board of trustees at the University of Tennessee or boards that govern, in Tennessee, other state and community colleges or, also in Tennessee, private post-secondary institutions approved by the board of education.

ESA funds can be used for tuition and fees and textbooks at these institutions, according to the current rules, as well as for “early postsecondary opportunity courses,” or dual-enrollment courses that provide students with college credit.

The current rules would therefore allow for ESAs to be used for higher education within the state of Tennessee. However, account holders must use at least 50% of annual funds each year, as calculated by the date for the final expense report deadline for the contract year.